The profitability of refineries varies widely, across different individual refineries and over time for a single refinery.

The economic performance of a refinery can be measured in a number of different ways. Typical measures of refinery profitability are:

• Refinery margins - A measure of the value created per unit of crude processed or per barrel of crude capacity.

• Refinery returns - The value created by the refinery per unit of capital invested or employed in the refinery.

• Refinery asset values - The lump sum value of a refinery, typically for a buyer or seller.

Drivers of profitability

There are a number of factors that have a large effect on refinery profitability, but they can be grouped into the following major categories:

• Oil market conditions (prices and spreads) – The pricing conditions for crude oil and refined products that determines the potential margin that a refinery can make processing crude to make finished products.

• Refinery configuration – The design of the refinery (capacity and complexity) that determines which crudes the refinery can run and what yield of product it can achieve.

• Refinery operating performance – The efficiency and effectiveness of running the refinery.

• Refinery commercial performance – The efficiency and effectiveness of sourcing crude oil (and other feed stocks) and selling products (and intermediates).